XRP jumps 6% as traders turn bullish, but overheating signals are flashing

Ripple XRP extended its gains on Tuesday after rallying more than 6% during the previous session.

Improving long-to-short ratios and positive funding rates indicate that derivatives traders are increasingly positioned for further price gains. 

However, data from CryptoQuant presents a more cautious picture, showing overheating conditions and sell-side pressure in parts of the futures market.

XRP derivatives traders turn bullish

CoinGlass data shows that long positions currently outnumber shorts for both cryptocurrencies.

XRP’s long-to-short ratio stood at 1.15 on Tuesday. A reading above 1 indicates that more traders are betting on price increases than declines.

Funding rates also support the bullish outlook. XRP’s funding rate turned positive on Monday and reached 0.0079% on Tuesday. 

Positive funding means traders holding long positions are paying those with short positions. 

This generally reflects stronger demand for bullish exposure, although excessively positive funding can eventually increase the risk of a long-position squeeze.

Despite the improving CoinGlass metrics, CryptoQuant’s market indicators highlight several risks.

XRP’s spot and futures markets are showing signs of overheating, while futures activity reflects sell-side dominance. 

Elevated participation from retail traders adds another layer of risk because heavily crowded retail positioning can make the token more vulnerable to sudden volatility.

The signals suggest that XRP’s rally retains bullish momentum but may be entering a more fragile phase.

In addition to the growing retail demand, institutional interest in XRP products has also been on the rise.

Data obtained from CoinGlass’ ETF page reveals that spot XRP Exchange-Traded Funds (ETFs) recorded an inflow of $11.26 million on Monday, their largest inflow since Wednesday. 

If the inflow persists, XRP could extend its rally in the near term, with the bulls targeting the $1.90 resistance level. 

XRP holds above key moving averages

XRP is trading at $1.40 on Tuesday after gaining more than 6% during the previous session.

The token remains firmly above its 50-day, 100-day and 200-day exponential moving averages, which are clustered between approximately $1.25 and $1.36. 

Holding above these indicators supports XRP’s constructive medium-term structure and maintains a bullish near-term bias.

The Relative Strength Index is slightly below 60, signaling positive momentum without indicating that XRP is overbought. 

However, the Moving Average Convergence Divergence remains marginally negative, suggesting that bullish momentum is stable rather than accelerating.

XRP’s first important support sits near the 200-day EMA at $1.35. A break below that level could expose horizontal support at $1.30, followed by the 50-day EMA near $1.28 and the 100-day EMA around $1.25.

If selling pressure intensifies, the $1 psychological level represents a stronger structural support zone.

On the upside, XRP faces major resistance near $1.90. A decisive daily close above that barrier would strengthen the bullish outlook and potentially clear the way for another upward move.

Until then, positive derivatives positioning supports further gains, but overheating signals and futures selling pressure warrant caution.